Fitch Ratings | Grand Lisboa Palace to drive SJM’s recovery from pandemic

Fitch Ratings believes the Grand Lisboa Palace will allow SJM to gain a foothold in Cotai and raise its market share.
“We forecast Grand Lisboa Palace will have EBITDA of HKD2 billion with 330 tables by 2022 and HKD3.5 billion with 380 tables by 2023, which will be partially offset by slightly lower EBITDA at its existing properties due to table reallocation and business diverted to Grand Lisboa Palace,” the institution noted.
However, “the Negative Outlook reflects the risk of a recovery that is slower than our expectations, which may result from extended travel restrictions and a slower ramp-up of Grand Lisboa Palace.”
Fitch Ratings has assigned SJM a Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘BB+’ with a Negative Outlook, and a senior unsecured rating of ‘BB+’.
Fitch has also assigned the Macau-based gaming operator’s proposed U.S. dollar senior notes a ‘BB+’ rating.
According to the American credit rating agency, the ratings reflect the gaming operator’s record of maintaining a conservative financial position, with “well-established operations” in Macau. Fitch forecasts adjusted net debt/EBITDAR will recover to 3.5 times and 1.8 times by 2022 and 2023, respectively, driven by the opening of Grand Lisboa Palace in early 2021 and a recovery from the pandemic. The ratings are also supported by a minimal capex pipeline following the completion of the HKD39 billion Grand Lisboa Palace.